The news that Microsoft was going to discontinue Skype for business has been a long-time coming. One might even suggest that back in May of 2011 – when the company acquired Skype for $8.5 billion eventual assimilation in some form was inevitable.
After all, according to the Deloitte paper Mergers and Acquisitions in Tech, Media and Telecom, a successful M&A comes down to having a sound integration plan.
For some, this means total absorption, such as when Oracle acquired and then collapsed PeopleSoft and, by extension JD Edwards into its monolithic brand. Unfortunately, the transition wasn’t smooth as existing users on both sides of the transaction were unhappy with the integration process.
“Companies should focus on making sure they’re adopting the appropriate integration model, based on a realistic assessment of their circumstances.” – Deloitte Center for Technology, Media & Telecommunications
Despite the Oracle acquisitions’ challenges, there were obvious benefits, such as Oracle increasing its market share while bolstering the JD Edwards brand. In other words, there were strategic reasons behind the M&A.
As was the case with Oracle, there were also strategic reasons for Microsoft to buy Skype. However, what is interesting and perhaps overlooked is the apparent evolution of said reasons. In this article, we will examine those differences in greater depth.
The Original Plan
In his May 2011 Computerworld article Five reasons Microsoft had to buy Skype, Preston Gralla listed the following five reasons why the company acquired Skype:
Enterprise Collaboration – Microsoft’s Lync Online offered the same service via the cloud as Skype Connect. Beyond app synergies, the purchase would enable the company to fend off competitors Google and Apple.
Boosting Bing – The hope was that having access to Skype’s 660 million worldwide users would boost the Bing search engine’s adoption by more users.
Kickstart Windows Phone 7 – At the time of the acquisition, Windows Phone 7 OS was “languishing.” The hope was that Skype would boost its prospects by introducing new capabilities that “neither Android nor iOS could match.”
Keep Skype away from Google – this one is self-explanatory.
Build the brand-buzz – Before buying Skype, the Apple, and to a lesser extent, Google brands shone a little brighter than Microsoft’s. The acquisition was going to boost the MS brand.
Given the above, the acquisition made sense. However, and in the context of the 2017 decision to discontinue Skype for business, the benefits and corresponding strategy associated with the initial purchase appears to have changed over time.
A New “Teams”
On March 14th, 2017 – six years after the Skype acquisition, Microsoft launched Teams. Close to six months later, the company announced that Teams would replace Skype for business.
The reasoning for the decision is that the Teams app had “achieved feature parity” with the Skype offering creating an unnecessary redundancy. Whether replacing Skype with a Teams-type platform was a part of the original strategy is hard to say. However, and despite some possible challenges, the decision to move to Teams makes sense.
Within the framework of Microsoft 365, Teams ultimately provides a single, unified platform for people to communicate, collaborate, and work more efficiently from anywhere at any time securely.
In future posts, we will examine each of the above areas of functionality in greater detail.
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